Employment Practices Liability Insurance (EPLI)

What is Employment Practices Liability Insurance (EPLI)?

Employment practices liability insurance or (EPLI) covers businesses against claims by workers that their legal rights as employees of the company have been violated. The number of lawsuits filed by employees against their employers has
been rising. While most suits are filed against large corporations, no
company is immune to such lawsuits. Recognizing that smaller companies
now need this kind of protection, some insurers provide this coverage
as an endorsement to their Businessowners Policy (BOP). An endorsement
changes the terms and conditions of the policy. Employment practices liability insurance (EPLI) can also be purchased as a stand-alone policy.

EPLI provides protection against many kinds of employee lawsuits, including claims of:

Sexual harassment

Discrimination

Wrongful termination

Breach of employment contract

Negligent evaluation

Failure to employ or promote

Wrongful discipline

Deprivation of career opportunity

Wrongful infliction of emotional distress

Mismanagement of employee benefit plans

How much does Employment Practices Liability Insurance cost?

The cost of EPLI coverage depends on your type of business, the
number of employees you have and various risk factors such as whether
your company has been sued over employment practices in the past. The
policies will reimburse your company against the costs of defending a
lawsuit in court and for judgments and settlements. The policy covers
legal costs, whether your company wins or loses the suit. Policies also
typically do not pay for punitive damages or civil or criminal fines.
Liabilities covered by other insurance policies such as workers
compensation are excluded from Employment practices liability insurance policies.

To prevent employee lawsuits, educate your managers and employees so that you minimize problems in the first place:

Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.

Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.

Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.